CBI Product Factsheet: Fresh Cut Summer Flowers in the European market
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CBI Product Factsheet: Fresh Cut Summer Flowers in the European market CBI | Market Intelligence Product Factsheet Cloves in Germany | 1
Introduction The market for summer flowers is expected to grow further in the future. Although the market has been difficult in recent years, the European economy as well as demand for summer flowers is increasing again. Summer flowers are mainly used as fillers in mixed bouquets. Demand for mixed bouquets and field bouquets of summer flowers is expected to increase. This trend is enhanced by an increasing assortment of mixed bouquets at supermarkets and gas stations. The best time for exporting summer flowers to Europe is during the autumn and early spring, as demand for flowers is high but supply of summer flowers from Europe is still low. Product description Summer flowers are flowers from plants, bulbs and corms that flower during the European summer, roughly from May to September. Summer flowers are traditionally associated with garden flowers and are used extensively as bouquet fillers. The term is used to denote a diverse group of flowers that are commonly traded as bouquet fillers, but are not the main sellers like cut roses, tulips, chrysanthemums and carnations, which actually flower in the spring and summer as well. Typical summer flowers are Gypsophila, Hypericum, Helianthus, Scabiosa, Liatris, Astrantia, Eustoma russellianum (Lisianthus) and many others. Most summer flowers are used in bouquets as fillers, in combination with, for example, roses, chrysanthemums or other flowers and foliage. A summer flower bouquet Source: Shutterstock. Key product specifications The Dutch flower auction FloraHolland plays an important role in the European cut flower trade. Although direct trade between producers/exporters and wholesalers and retailers (i.e. without using the auction system is increasing, a large part of the summer flowers are traded at the auction. The Dutch flower auction provides general product specifications for a number of specific summer flowers like Helianthus, Hypericum and Solidago, and general product specifications for other summer flowers which are widely recognised in the trade. As these product specifications are well documented, we will present them here as a reference. Keep in mind that specifications and requirements for specific summer flowers and requirements of individual buyers may differ. There are specific requirements regarding quality, size, packing and information on the product (labelling) set by the Dutch Flower Auctions Association (VBN) in agreement with growers and traders. Below, we refer to these requirements that are widely adopted as minimum requirements across the entire cut flower industry, including flowers traded in the direct channel. Key product specifications may however differ between the direct trade channel and the auction. Quality and grading: Summer flowers may be traded at the Dutch flower auction FloraHolland if they meet the VBN specifications. Grading and other requirements may differ for individual buyers in the direct trade channel. The product specifications consist of two parts: general requirements for all supplied flowers and specific requirements for specific flowers. For different types of summer flowers there are different specifications. For a large group of summer flowers listed in this overview of VBN, roughly the same specifications apply. Products which do not meet the requirements regarding pre-treatment, minimum quality, bacteria content and ripeness are not traded and are destroyed if necessary (VBN). You are advised to study the requirements carefully. CBI | Market Intelligence Product Factsheet Fresh Cut Summer Flowers in the European market | 2
Cut flowers are traded in three quality groups: A1, A2 and B1, depending on the extent to which they meet the quality and grading criteria. A1 summer flowers must meet all the minimum requirements on internal quality and freshness, being free of parasites, damage, deficiencies, deviations, contamination, free of leaves in the lower 10 cm part of the stem, straight and sturdy enough to bear the flower, uniform in colour, thickness, sturdiness and bouquet volume, and properly packed. Any deviations from these requirements may result in downgrading from A1 to A2, or B1. Cut flowers that do not at least meet the criteria for B1 are not traded. At the Dutch flower auction, growers are responsible, through self-assessment, for grading and the reliability of the information they provide with their lot. However, the auction assesses customer reclamations to check the reliability of the suppliers. A reclamation can be the result of, for example, incorrect product information on the consignment note or labels. The Quality Index (QI) is based on the number of customer complaints or reclamations in the last 8 weeks. Information on your QI is shared with customers and reported back to you, including the number and content of product reclamations. In general, a grower’s good reputation, based on constant quality, is often rewarded with a higher average price per stem. Packaging: Summer flowers traded at the auction may be packaged in containers or cardboard boxes. Flowers are repacked into plastic flower containers (buckets) at the auction in the Netherlands or at the importing wholesaler. VBN gives detailed information about auction requirements for packing and loading. Check whether there are special requirements for your product. Final sales of summer flowers to end-consumers consists mainly of mixed bouquets in either plastic buckets or special containers, such as those from bouquet producers, at specialist florist shops and supermarkets. Bouquets are sometimes pre-packed in plastic or paper sleeves, and are sometimes assembled and wrapped at the florist shop. Labelling: When exporting through the Dutch auction, the flowers are often loaded on a stacking cart. Every stacking cart must be accompanied by a fully and correctly completed consignment note containing information about the stacking cart. In addition, every packaging unit needs to be labelled with product and supplier information, namely: Supplier number; Variety name; Amount (e.g. stems) per packaging unit (e.g. bucket, etc.); The grading marks (Class A1, A2, B1); Supplier name. Additional product labelling will generally take place at the auction/wholesaler or bouquet producer. During trade, some important quality labelling is necessary, including: tracking/tracing codes and GLOBALG.A.P., MPS, FFP or other identification. Tips: Visit the VBN website to find out about changes in product specifications. Contact your import agent or your potential client about any additional requirements if you wish to supply directly to customers in Europe. What is the demand for summer flowers on the European market? General information and figures about production, consumption and trade developments in the European market are provided in the CBI Trade Statistics for Cut flowers. Specific information about consumption or imports of summer flowers on the European market do not exist. The Dutch Flower Auction FloraHolland does provide information about trade at the auction to its members. Becoming a member and supplier may therefore give you access to additional market information. For this factsheet we can only use the information that is publicly available. The total EU market for cut flowers was estimated at around € 20 billion in 2014 (calculation LEI based on Rabobank, 2015, and Eurostat population statistics). Germany, France, the UK and Italy are the largest markets in terms of consumption value of cut flowers. EU consumers spend between € 20 and € 50 per capita per year on cut flowers. It is expected that the market for cut flowers will grow moderately in the next five years, mainly due to recovering economic growth and further market development in Central Europe. CBI | Market Intelligence Product Factsheet Fresh Cut Summer Flowers in the European market | 3
Figure 1: Consumption of cut flowers for selected countries, in euro per capita, in 2013 80 70 60 50 40 30 20 10 0 Source: FloraHolland Consumentenpanel 2014, in Rabobank, World Floriculture Map, 2015. Summer flowers are used mainly as fillers in mixed bouquets. In Europe, bouquets constitute about half of the total expenditures on cut flowers. About 35% consists of mono-bunches, and the remainder is spent on flower arrangements and wreaths, and single flowers. Mixed bouquets are especially popular in the more traditional flower markets of the United Kingdom, Germany, Ireland, Austria, Denmark, Belgium, France and the Netherlands. Specific data on imports and market size of summer flowers are not available. However, the Dutch Flower Auction plays an important role in the trade in flowers in Europe. The data on turnover of certain top-selling types of summer flowers at the auction reveal some information about the market size and trends in the European market. Figure 2: Turnover and supply of several summer flowers in the top 25 types of flowers sold at the Dutch Flower Auction, 2013 and 2014 140 120 100 80 60 40 20 0 Eustoma Hypericum Gypsophila Limonium Helianthus Ranunculus russellianum turnover mln euro 2013 turnover mln euro 2014 mln stems 2013 mln stems 2014 Source: FloraHolland, 2015. In terms of turnover, Lisianthus (Eustoma russellianum) and Hypericum are among the top selling summer flowers at the Dutch Flower Auction. Lisianthus is mainly supplied from specialised Dutch growers. From developing countries Hypericum CBI | Market Intelligence Product Factsheet Fresh Cut Summer Flowers in the European market | 4
(€ 20 mln auction turnover from imports in 2014), Gypsophila (€ 17 mln), Limonium (€ 10 mln), Chamelaucium (€ 8 mln ), Ranunculus (€ 8 mln), Solidago (€ 7 mln) and Eryngium (€ 7 mln) are among the top products in terms of import turnover. Other summer flowers that are imported from developing countries include Astrantia, Scabiosa, Delphinium, Clematis and Liatris. Compared to 2007, imports at the auction of Hypericum, Gypsophila and Solidago have clearly decreased, while imports of Limonium, Ranunculus and Eryngium have increased. Hypericum, Gypsophila and Solidago are imported in the direct trade channel more often, which has caused the auction sales to decrease. Overall, we estimate that the total sales of summer flowers in gradually increasing. Growing markets for summer flowers can be found in Scandinavia and Central Europe, and summer flowers are also becoming more popular in traditional markets in the UK, Germany and France. Tips: The Netherlands remains an important trade partner for developing countries. Dutch traders and import agents have a great deal of experience in facilitating flower trade from developing countries. As summer flowers are used extensively for bouquets and florists are the main sales channel for bouquets, the flower Auction is a very important trade hub for summer flowers. For the supermarket and other unspecialised retail channel, importers that specialize in these customers import summer flowers to assemble bouquets. If you are targeting the unspecialised market channel you need to build a sustainable relationship with these actors and communicate proactively. The Dutch wholesalers and importers association is called VGB. Visit their website for more information on Dutch wholesale traders. All the main importers are usually present at the main Flower Exhibitions like ProFlora in Colombia, IFTEX or Nairobi Flower Show in Kenya. Presenting novelty flowers at the Flower Exhibitions in Europe is also a good way to find potential buyers and test market response. Important trade fairs are IPM in Essen Germany, IFTF in Vijfhuizen in the Netherlands, and the Royal FloraHolland Trade Fair in Aalsmeer in the Netherlands. Before exporting to Europe, think carefully about which market segment best fits your product, study the competition and make sure that your product is competitively priced or really stands out from the competition in terms of exclusivity and quality. What trends offer opportunities on the European market for summer flowers? You can find more information on general trends and developments on the European market for cut flowers in CBI Trends. Increasing demand for summer flowers and field bouquets in the supermarket channel With a growing market share of supermarkets in the distribution of cut flowers, there is an increasing demand for high quality summer flowers that can be supplied in large volumes. Long vase life and uniform product appearance are important issues for this market channel. Field bouquets made of summer flowers are especially popular in France. In recent years, field bouquets have become more popular in other countries as well, and can be found at supermarkets more often. Increasing demand for socially responsible and environmentally sustainable produced cut flowers in the EU There is an increasing demand for socially responsible and environmentally sustainable produced flowers in the EU. It is mainly the traditional markets like Germany, the UK and Scandinavia that require social standards such as Fairtrade, ETI or MPS-SQ for supplying the mainstream supermarket retailers. Although Fairtrade and FFP labels can be found mainly on roses, Fairtrade flower bouquets including Helianthus, Gypsophila, Solidago, Eucalyptus or Statice can be found at many florists in these countries. FFP summer flowers include a wide array of flowers. Tips: Many EU retailers are starting to demand social standards, like Fairtrade or ETI. Retailers often ask for a variety of certificates. Find out which retailers are asking for which combination of certification schemes and how you can comply. Many EU retailers demand standards that include good agricultural practices, social conditions and environmental sustainability, like MPS-ABC or Florverde ® Sustainable Flowers. Find out which retailers are asking for which combination of certification schemes and how you can comply. In the florist market channel, Fairtrade or similar schemes are not widely demanded in most countries, but demand is increasing. CBI | Market Intelligence Product Factsheet Fresh Cut Summer Flowers in the European market | 5
Longer vase life Quality is often a minimum requirement for supplying the EU market. Good quality is important in every market channel, and especially for the lower priced flowers offered in supermarkets. A vase life of 7 days is often regarded as a minimum for a bouquet. Selecting varieties with a longer vase life and paying special attention to post-harvest handling and the cold chain can give your company a competitive advantage. Tip: A long vase life is essential in order to supply the EU market successfully. So make sure that the product is cut while the buds are not fully open and are treated well during transport. Growing market share of supermarkets and direct trade Direct trade between producers and (exporting) wholesale traders in Europe, bypassing the Dutch flower auction, is increasing. Wholesale traders set a wide variety of buyer requirements (based on the requirements set by their client) that may deviate from the general auction requirements. Tip: There might be additional buyer requirements for trading on the direct market, especially in the supermarket segment. Contact the wholesaler to verify the requirements that you need to fulfil in order to supply them. Requirements often differ per supermarket. Payment terms are creating problems throughout the entire cut flowers value chain. Supplying via the Dutch flower auction means you will definitely receive your money. Payments are wired to your account soon after so you don’t have to wait longer (between 30 and 60 days). Try and make clear agreements with your wholesale trader on payment terms. Increasing internet sales and ICT in the supply chain There is an increasing need for information sharing between grower and trader for both tracking and tracing purposes, as well as for facilitating sales. ICT is becoming more important in the sales process. Wholesale traders connect their clients to an online webshop to offer real-time insights into available stock. Tip: Stocks are increasingly held at suppliers (upstream) with integrated stock management systems. This requires growers and exporters to respond quickly and efficiently to orders and always provide up-to-date and reliable information. What requirements should summer flowers comply with to be allowed on the European market? What legal and non-legal requirements must my product comply with? Plant health Summer flowers exported to the EU must comply with the EU legislation on plant health. The EU has laid down phytosanitary requirements to prevent the introduction and spread of organisms harmful to plants and plant products in the EU. Summer flowers imported in the EU must be accompanied by an official “phytosanitary certificate” guaranteeing that the phytosanitary conditions of plants and plant products have been met, and also that the shipment has been officially inspected, complies with statutory requirements for entry into the EU and is free of quarantine pests and other harmful pathogens. Phytosanitary certificates are issued by your National Plant Protection Office (NPPO). CBI | Market Intelligence Product Factsheet Fresh Cut Summer Flowers in the European market | 6
Tips: Check with the relevant National Plant Protection Organisation for the exact procedures to obtain the phytosanitary certificate. A model phytosanitary certificate can be found in Annex VII of the Plant Health Directive. Check if your country and the country you want to export to have implemented digital services to facilitate the import and export process. For example, in Holland there is the CLIENT export system, which is also used by the Kenyan and Ugandan inspection authorities. Read more about plant health in the EU Export Helpdesk. Intellectual Property Rights (IPR) Developing new flower varieties is very expensive. The developers of new varieties are protecting their investments with intellectual property rights. Growers who want to use the seeds of these companies have to pay royalties. In recent years, there has been an increased focus on breeders’ rights, and illegal products are rejected from the market. Tips: Make sure you only buy plant material from approved agents that have an official agreement with the dealer so that royalties are paid. An interesting trend is that breeders’ only allow their new variety to be grown by a select group of growers to prevent oversupply in the market. Staying in contact with breeders and offering perfect conditions for growing their new variety may therefore be an advantage. Familiarise yourself with the protection frameworks for new plant varieties, for example from the Union for the Protection of New Plant Varieties (UPOV) or the Community Plant Variety Office (CPVO). Full overview of requirements for summer flowers: For a list of requirements for summer flowers, consult the EU Export Helpdesk where you can select your specific product under chapter 06031900. What additional requirements do buyers often have? CSR - Corporate Social Responsibility and GAP EU consumers are paying more and more attention to social and environmental circumstances during the flowers’ production. As a result, EU buyers require you to meet certain environmental and social standards in the form of certification of B2B schemes and consumer labels. Compliance with environmental standards (focusing on pesticide and water use) is a very common requirement, while social conditions are gaining importance. The most important B2B sustainable quality scheme for summer flowers is MPS. MPS ABC certification covers environmental performance and is considered a must for growers. Furthermore, MS has several other schemes such as MPS-SQ (focusing on social issues), MPS-GAP (on Good Agricultural Practices) and MPS-Quality. The most comprehensive scheme is MPS-Florimark, which is a combination of the aforementioned four schemes. GLOBALG.A.P. is a B2B scheme originally focussing on Good Agricultural Practices. Although not yet extensively used in the cut flower trade, it is gaining in importance, especially when selling to supermarkets. MPS GAP, KFC Silver Standard (Kenya Flower Council) and EHPEA Code of Practice for Sustainable Flower Production - Silver Level (Ethiopian Horticulture Producer Exporters Association), are officially recognised as equivalent to GLOBALG.A.P, whereas Florverde ® Sustainable Flowers (Asocolflores Colombia) is recognised as a similar certification scheme. CBI | Market Intelligence Product Factsheet Fresh Cut Summer Flowers in the European market | 7
Tips: Both buyers and consumers (especially in Western and Northern Europe) consider environmentally friendly production very important and this importance is expected to increase in the future. Use your good practices and certification as a marketing tool when communicating with (potential) buyers. There is an abundance of standards to choose from (although the actual criteria show a lot of similarities). To determine which scheme you should follow, the market you are targeting will probably be decisive (which country do you want to export to and which trade channels do you use?) MPS gives an overview of all MPS schemes including links to the criteria per scheme. GLOBALG.A.P. gives an overview of all the standards for flowers and ornamentals. Check for existing initiatives in your country. Examples are the Colombian Florverde ® Sustainable Flowers standards or the code of the Kenyan Flower Council. Sometimes these local initiatives are benchmarked against GLOBALG.A.P., MPS, ETI or Rainforest Alliance. Private labels The increasing share of the “unspecialised” market (supermarkets etc.) in comparison with the “specialised” market (florists) has also affected buyer requirements. Several supermarket chains offer flowers under their own private labels, often referring to social and environmental conditions at the production level. Furthermore, importers may also participate in initiatives such as the Ethical Trading Initiative (ETI) in the UK, or the Business Social Compliance Initiative in several Western European countries. These initiatives focus on improving social conditions in their members’ supply chains. This implies that you, as a supplier, are also required to act in compliance with their principles. Tips: If you want to target supermarkets directly, check which sustainability criteria they impose and whether they use their own private labels. Assess your company’s current performance by performing a self-assessment, which you can find on the BSCI website. Cold chain management Proper cold chain management has a positive effect on the quality and vase life of summer flowers. Therefore, EU buyers’ demands for cold chain protocols are growing. Note that while improving your cold chain management may be a challenge, the higher product quality should also improve your profits. Tips: Developing and implementing cold chain protocols will be vital to survival in the coming years. Do not wait until buyers ask for improved cold chain management, but anticipate the developments. What are the requirements for niche markets? Fairtrade Although CSR requirements are common buyer requirements, standards that are communicated through a consumer label still represent a relatively small part of the market, mostly in North-western Europe. The sales of Fairtrade cut flowers is increasing, particularly in Germany and the UK. Examples of relevant consumer labels are Fair Flowers Fair Plants (FFP), which is mainly used in the florist retail channel, Fairtrade International, which is mainly used in supermarkets, and Rainforest Alliance. Tips: Always check with your buyer if he/she requires certification and which certification he/she prefers. Consult the Standards Map database for the different labels and standards relevant for cut flowers. What competition do I face on the European summer flowers market? Some European countries like France, Italy, the Netherlands, Spain and Germany, have a significant production of summer flowers. In some countries, the production of summer flowers even exceeds domestic consumption. Particularly in the CBI | Market Intelligence Product Factsheet Fresh Cut Summer Flowers in the European market | 8
Netherlands, France, Spain, Italy and Germany, there are major producers of summer flowers. Some of the Central European countries, like Poland and Hungary, are also major producers of summer flowers. Although traditionally grown outside in the open field, more and more summer flowers in Europe are produced in greenhouses, extending the production season. During the summer months (from June to September) when production of summer flowers is high in Europe, demand for imports is generally lower. As a large part of the summer flowers are used in bouquets, a year-round supply is needed. Large quantities of summer flowers are therefore imported, particularly during the winter months. As a result, the best export window for summer flower exporters in developing countries is during the period October-May, with particular peaks in March-May and October-November. Competition from European growers is very strong in the summer period. Prices are highly dependent on weather and demand conditions. An early spring can increase prices a lot, whereas prolonged rainfall or cold can lower demand for bouquets substantially. Outside Europe, summer flowers for the European market are produced mainly in Africa, South America and Israel. Kenya and Ethiopia are large producers of Hypericum, Solidago, Astrantia, Gypsophila and other summer flowers. Summer flowers also come from Zimbabwe, South Africa and a host of other countries. Ecuador and Colombia also export Gypsophila, Hypericum and a number of other summer flowers to Europe. Israel is an important supplier of, among others, Solidago, Chamelaucium, Ranunculus, Liatris and Limonium. Although competition is high, demand for summer flowers is generally expected to further increase in the future, and outside the summer months the market for summer flowers seems to be able to absorb some extra supply without too much pressure on prices. What do the trade channels and interesting market segments look like in Europe for summer flowers? Summer flowers are traded through both the auction trade channel as well as the direct trade channel. The most popular species in particular are traded in the direct trade channel more often. Summer flowers follow the same distribution channels as other cut flowers. They are either supplied 1) via the auctions (mostly through an import agent), or 2) to an import wholesaler (and/or bouquet assembler) who supplies either domestic retail or exports to other European countries. Handling imports has never been a core business function of auctions. While the import departments of auctions have invested in import-related infrastructure, such as roller beds for airplane pallets, the auctions largely rely on external agents to perform import functions (e.g. cutting, re-hydrating and re-packing flowers). In many cases, the flowers are therefore received by an agent who repacks the products for auction. One of the important developments in the auction channel is the increasing use of Remote Buying (KOA) by auction buyers. A vital criterion for remaining successful in this increasingly “virtual” trade is being able to supply a constant and reliable product quality and the associated information. For summer flowers this can be a problem, as they tend to be more susceptible to climatic conditions. Product quality therefore tends to fluctuate more than with other types of flowers. Several developing country growers/exporters have been pursuing alternative marketing arrangements - including direct supplies to supermarkets - to achieve year-round sales. As a result, a growing volume is traded in the direct trade channel. The characteristics of the market channels and segments are described in the general information on Trade channels and market segments for Cut flowers and foliage. What are the end market prices for summer flowers? Summer flowers are mostly sold as filler in bouquets. A bouquet that consists (mainly) of summer flowers is called a field bouquet. Field bouquets and other mixed bouquets are sold at florist shops, supermarkets, gas stations and street market stalls and kiosks. The quality of the flowers (also in terms of length and size of flowers) varies between the different sales channels. This affects the prices at which the bouquets are sold. A medium-sized bouquet of summer flowers and foliage (with about 15 stems of summer flowers and foliage, often combined with one or two roses, gerberas or lilies) at a florist shop in the Netherlands will sell for about € 20–25 depending on the types of flowers included. CBI | Market Intelligence Product Factsheet Fresh Cut Summer Flowers in the European market | 9
Figure 3: Price breakdown Export Shipping Import / Wholesale Retail + 20% + 15% + 20% + 45% Useful sources Export and market entry support: Auction Royal FloraHolland in the Netherlands - https://www.royalfloraholland.com/en/ Auction Rhein-Maas in Straelen Germany - https://www.veilingrheinmaas.com/en/ CBI - http://www.cbi.eu/ CBI Market Information - https://www.cbi.eu/market-information/ EU Export Helpdesk - http://exporthelp.europa.eu/thdapp/index_en.html Certification schemes: Ethical Trading Initiative - http://www.ethicaltrade.org/ Ethiopian Horticulture Producer Exporters Association - http://www.ehpea.org/ Fair Flowers Fair Plants - http://www.fairflowersfairplants.com/home-en.aspx Fairtrade - http://www.fairtrade.net/ Florverde ® Sustainable Flowers - http://florverde.org/ GLOBALG.A.P. - http://www.globalgap.org/uk_en/ ITC Standards Map - http://www.standardsmap.org/ Kenya Flower Council - http://kenyaflowercouncil.org/ MPS - http://www.my-mps.com/en/ Marketing and trade standards: EU legislation on Organic Production - http://ec.europa.eu/agriculture/organic/eu-policy/legislation_en UNECE Standards for Cut flowers - http://www.unece.org/trade/agr/standard/flowers/flower_e.html VBN Dutch Flower Auctions Association - http://www.vbn.nl/ VBN Product Specifications - http://www.vbn.nl/en-US/Productinfo/Pages/Productinformations.aspx Statistics and sector information: AIPH - http://www.aiph.org/ Eurostat -http://ec.europa.eu/eurostat/data/database ITC Trade Map - http://www.trademap.org/ UN Comtrade - http://comtrade.un.org/ CBI | Market Intelligence Product Factsheet Fresh Cut Summer Flowers in the European market | 10
CBI Market Intelligence P.O. Box 93144 2509 AC The Hague The Netherlands www.cbi.eu/market-information marketintel@cbi.eu This survey was compiled for CBI by LEI Wageningen UR in collaboration with CBI sector expert Milco Rikken Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer August 2016
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